David Cameron personally took part in the vetting of Andy Coulson before his
controversial appointment as his communications chief, the Leveson Inquiry
has heard.

Mr Cameron rang the former News of the World editor when he was on holiday and asked him about the phone-hacking scandal over which he had resigned. In the same phone call he told him “background security checks had been made”.

But Mr Cameron did not ask him whether he held any shares in News International or related companies, and Mr Coulson admitted he had retained shares in News Corporation while he worked in Downing Street, which he now sees as a potential conflict of interest.

The Prime Minister has come under intense criticism over his decision to appoint Mr Coulson as his media strategist in 2007, months after the News of the World’s royal editor, Clive Goodman, and a private detective had been jailed for phone-hacking.

At the Leveson inquiry today, questions were asked about how thoroughly Mr Coulson – who was arrested last year and remains on police bail – was vetted after Mr Cameron told Parliament he only went through “basic” security checks.

As No 10's director of communications, Mr Coulson was given access to documents designated top secret and attended meetings of the National Security Council.

He was security cleared to "SC" status, meaning security checked, rather than "DV" or developed vetting, which was the more common, higher clearance status for someone in his position.

Giving evidence, he said: "My understanding is that SC allows occasional access to top secret material."

Mr Coulson said Mr Cameron asked him about Clive Goodman.

"I was able to repeat what I said publicly, that I knew nothing about the Clive Goodman and Glenn Mulcaire case in terms of what they did," he said.

The former editor said no-one asked him about his ownership of shares in News Corp called restricted stock units, which were worth £40,000.

He said his job was so busy that "I didn't take the time to pay close attention to my own circumstances".

Mr Coulson was asked about the process by which he was recruited by the Tory party.

The first approach came from George Osborne in March 2007 – the month after Goodman was jailed – when they met at a London hotel for a drink after Mr Osborne had contacted him, the inquest heard.

“He told me the Conservative Party wanted to make changes to its professional operation and asked whether I might be interested in joining the team,” Mr Coulson said in his statement.

He said he was “initially reluctant” because he had never worked in politics, but later the same day Mr Cameron called him and asked him to meet, which he later did in Mr Cameron’s parliamentary office.

“After further conversations with Mr Cameron, the then party Chairman Francis Maude, chief of staff Ed Llewellyn and Steve Hilton [Mr Cameron’s strategist] I was offered the job.”

He said the hiring process was completed while he was on holiday in Cornwall, when Mr Cameron rang him and “told me that background security checks had been made... At no point was my severance package with News International discussed”.

In his statement, Mr Coulson makes clear that the security checks did not include inquiries about his share holdings in News Corp, which began a politically-sensitive bid to take over BSkyB in 2010.

Mr Coulson states: “Since resigning from my role as Downing Street Communications Director I have given thought to one issue which I now accept could have raised the potential for conflict.

“In 2006 I was awarded News Corp stock along with other company executives. As referred to above, there was also further stock to come to me in 2007… I had sold other shares awarded to me during my years at News International both before and immediately after my resignation.

“Whilst I didn’t consider my holding of this stock to represent any kind of conflict of interest, in retrospect I wish I had paid more attention to it.

“I was never asked about any share or stock holdings and… it never occurred to me that there could be a conflict of interest.”

Mr Coulson says he had no involvement in the Government’s response to News Corp’s bid to buy BSkyB, but the Conservatives have already faced calls for an independent inquiry after a series of emails between News Corp lobbyist Frederic Michel and a special adviser to Jeremy Hunt, the Culture Secretary, were released to the Leveson Inquiry by Rupert Murdoch.

They appeared to show that News Corp was being given advance notice of major decisions in the process of scrutinising the BSkyB bid.

Mr Coulson resigned from his Downing Street job in January last year after the police began a fresh investigation into hacking.

He says he met Mr Cameron five times when he was editor of the News of the World, and when he went to work for the Tory leader he would encourage him to have journalists round for dinner at his home.

“David Cameron was not always a willing participant,” he says. “Given the choice, I think he would have preferred to be doing other work or enjoying a night at home with his family. However… he reluctantly agreed it was important to meet with journalists.”

Having been recruited after an initial approach by George Osborne, Mr Coulson developed a personal friendship with him, and spent a weekend at his official weekend retreat, Dorneywood, in 2010.

Mr Coulson and his family were guests of Mr Osborne and his wife, and Rebekah Brooks and her husband Charlie were also there, he says.